Calling all rookies! 🏡
Buying your first home can be pretty daunting and it can seem impossible to know where to start when searching for a property in Canada.
Jordan Bieri, a residential real estate broker, chatted with Narcity about the biggest mistakes rookies always make and how to go into the process as prepared as possible.
From messing up negotiations and forgoing inspections to completely mismanaging your budget, there are plenty of ways that your real estate experience can go totally wrong.
Here's a look at what NOT to do as a first-time buyer when starting your home search in Canada.
Giving up before even starting
Residential real estate broker, Jordan Bieri, told Narcity that one of the biggest mistakes rookies make is giving up before they've even started considering the process of buying a home.
He said that many people assume they cannot afford a property and opt to rent indefinitely, however, they could actually be mistaken.
"The downfall to assuming buying capacity or lack thereof runs the risk of missing out on an opportunity that would’ve been within reach."
He suggested consulting a real estate broker who can put you in touch with a mortgage specialist for free.
Making the right offer
You know what they say about assuming, right?
According to Bieri, it's actually a huge misconception that all properties will be negotiable, particularly in the current housing market.
He acknowledged that while this was common for previous generations, things are starting to change.
"The market as we’ve seen it develop has shown that we run the risk of losing the property if we are not being strategic with the offer made," he explained.
To make an educated offer, he said the buyer must consider a number of factors.
This includes comparable recently-sold properties in the same area (at least three), their listing price vs their selling price, how long those homes took to sell and the state of the current property in comparison to the ones sold (including things like renovations, views, garages etc.).
Misunderstanding your budget
Bieri says not understanding the costs associated with owning the home you want to buy is a classic newbie mistake.
He said many first-time buyers fail to consider the financial implications of things like property taxes, co-ownership fees (for shared dwellings), necessary upcoming renovations (roof, windows, paving ect.) and more.
This is often not factored into the buyer's original budget and can leave them short on cash at a later date.
"It is also very important to set aside money for closing costs (notary and welcome tax)," he said.
"Planning ahead is key and will reduce financial pressure and unexpected costs to ensure your buying experience is a pleasant one."
Failing to prepare
On a similar note, he says rookie buyers should account for other costs when making their property budget.
"Always set aside a 2% to 4% budget for post-purchase corrections following an inspection," he explained.
"It is important to not assume that if a problem is discovered during an inspection that the seller will automatically reduce the price of the sale. No property is perfect and generally will always have their unique problems that will require some attention," the expert said.
As a general rule, he advises to "shop between 2% and 4% below your buying capacity, to ensure that you don’t find yourself in financial restraint."
Skipping an inspection
Although it's easy to understand why first-time buyers would want to cut costs where possible, Bieri says an inspection remains essential.
He told Narcity that foregoing an inspection due to bidding wars or outside pressure is pretty common for first timers, but it is definitely a mistake.
"An inspection is crucial — especially for a first-time home buyer — to understand the state of the property," he said.
"Knowing that funds may be limited as a first time buyer, the last thing you want to do is to find yourself with a property that has major hidden issues which will cost thousands to rectify — simply because you wanted to win a bidding war or wanted to save the cost of inspection."
In fact, he even said it is "smarter to lose the property altogether than buy it blindly without knowing its actual state."
Not using a broker
If you're new to the game, don't go it alone. Not using a broker to represent you during the purchase is a mistake, according to Bieri, as they act as an expert to support you throughout the process.
"While Quebec authorizes the listing broker to represent the buyer as well, it is always more prudent to use an impartial source to ensure that the proper research on the property is being done," he said.
"This does not mean that the listing broker will not provide this, but you want someone in your corner who has a trained and professional eye ensuring the proper questions are being asked and the property is being properly verified to mitigate future problems."
"Remember that hiring a buying broker does not cost you anything but you benefit from all of their knowledge and experience to help guide the most important and substantial investment of your life," he said.
Bieri added that many brokers can also provide additional legal protections that you may not receive otherwise.
Searching for "perfect"
While almost everyone who is buying a property is probably hoping to find their dream home, this type of wishful thinking can actually result in heartache.
He says that in most cases, first-time buyers (or any home buyers, really) will need to make compromises to find a property that suits their needs and their budget.
For example, Bieri says you may need to renovate the kitchen or consider a smaller garden than you wanted, as the perfect home simply does not exist.
This interview has been condensed and edited for clarity.
This article's cover image was used for illustrative purposes only.
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